Selling Your Home - Common Q&A About Selling Your Home
Should I add on or buy a bigger home?
Consider these questions before making a choice between adding on to an existing home or moving up in the market to a bigger house:
* How much money is available, either from cash reserves or through a home improvement loan, to remodel the current house?
* How much additional space is required? Would the foundation support a second floor or does the lot have room to expand on the ground level?
* What do local zoning and building ordinances permit?
* How much equity already exists in the property?
* Are there affordable properties for sale that would satisfy housing needs?
Ultimately, the decision should be based on individual needs, the extent of
work involved and what will add the most value.
How do I prepare the house for sale?
First and foremost, put your house in the best condition possible, especially if you are in a market with few buyers and lots of homes for sale. That means taking care of any major repairs that could deter a buyer (such as replacing any broken windows or replacing a leaky roof) if you can afford it. Next, work on your home's curb appeal. Make sure your landscape is pristine. Mow the grass, clean up any debris, and weed the garden beds. Other quick fixes that don't cost a lot of money but can help you get top dollar for your home:
What repairs should the seller make?
If you want to get top dollar for your property, you probably need to make all minor repairs and selected major repairs before going on the market. Nearly all purchase contracts include an inspection clause, a buyer contingency that allows a buyer to back out if numerous defects are found or negotiate their repair. The trick is not to overspend on pre-sale repairs, especially if there are few houses on the market but many buyers willing to buy at almost any price. On the other hand, making such repairs may be the only way to sell your house in a down market.
Do I need an attorney when I buy or sell a house?
In Arizona, you do NOT need an attorney to complete a real estate transaction. However, you are certainly welcome to have an attroney review your contract if you desire. However, make sure that the attorney reviews the contract PRIOR to signing. Arizona allows licensed real estate agents to write contracts for real estate as long as they are not claiming to be lawyers, and as long as the contract pertains directly to the real property being sold or leased.
What are the standard contingencies?
Most purchase offers include three standard contingencies: a financing contingency, which makes the sale dependent on the buyers' ability to obtain a loan commitment from a lender; an appraisal contingency, which makes the sale dependant on an appraisal at or above sales price; and an inspection contingency, which allows buyers to have professionals inspect the property to their satisfaction. The buyer may forfeit the earnest deposit under certain circumstances, such as backing out of the deal for a reason not stipulated in the contract.
What are some tips on negotiation?
The more you know about a buyer's motivation, the stronger a negotiating position you are in. For example, a buyer who must move quickly due to a job transfer may be amenable to a higher price with a speedy escrow. A buyer that is thinking about a second home might have a tighter price limit in mind and may wait for another property if the seller wants too much money. Negotiation is always a balance between the benefit of getting a higher price vs. the potential loss of the deal. Also, if the buyer is obtaining a loan, then the price might have an appraisal ceiling. The buyer may fall in love with the house, but if the appraisal comes in low, then the lender will only lend based on the appraised value.
How long will the escrow take to close?
A typical real estate transaction takes 30-45 days. Some transactions can be as quick as seven days if the house is vacant and the buyer is paying cash. Some escrows take longer if either party needs more time to move or if there are loan delays.
How much will I net from the sale?
A good rule of thumb is to estimate about 8% in total closing costs. This number includes escrow fees, title insurance, prorated taxes, commissions, transfer fees, and various other incidental costs related to the sale. Multiply the estimated sales price by 92% to get the estimated net proceeds. Then subtract any loans that need to be paid off. For example, with a $300,000 sales prices, the net proceeds would be about $276,000. If there was a $200,000 loan balance, then the final proceeds would be about $76,000.
Can I afford to sell?
If your loan amount is more than your estimated net proceeds, then you will either have to bring money to the table, or you will need to puruse a 'short sale'. A short sale is where the seller asks the lender to forgive the loan debt when the proceeds from the sale are not high enough to pay off the loan. Even if your proceeds exceed your loan amount, you need to be sure that you have enough money for your next home, whether you plan to buy or rent.